Manulife Exploring IPO or Spinoff for John Hancock Unit

Wall Street Journal (July 14, Scism, Monga, McNish) sources have confirmed that "Canadian insurer Manulife Financial Corp. is exploring a possible initial public offering or spinoff of its John Hancock Financial Services Inc. unit." The move comes as life insurers continue to struggle with low interest rates and other challenges to their business. Industry officials have long cited the duress low interest rates place on some of their basic product offerings. If it does move forward with the break-up of its Toronto-based company, Manulife would be the latest life insurer to "hive off" a sizable chunk of its business. For example, rival insurers MetLife Inc. and AXA SA have both shed big U.S. operations built around sales of life insurance, retirement-income annuities and other savings products to American households. "Manulife has been under pressure from some of its shareholders to sell John Hancock after years of disappointing returns from the U.S. unit," notes the Journal sources.

The Boston Business Journal (July 13, Ryan) has further learned that Morgan Stanley has been working on behalf of Manulife for months to sell all or parts of John Hancock. Last year, the division was responsible for 46 percent of Manulife's total premiums and deposits along with 56 percent of its assets under management and administration. But the unit's net income was down 22 percent last year versus 2015. "In addition to offering life insurance and other insurance products, John Hancock has a wealth management division," notes the Business Journal.